Exelon Corporation · NASDAQ:EXC
Exelon — NRG Energy — Merger or Acquisition (October 2008)
17 slides from Exelon's merger presentation, Oct 30, 2008
Slide 1: Filed by Exelon Corporation - Safe Harbor Statement
Filed by Exelon Corporation (Commission File No. 1-16169) Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: NRG Energy, Inc. (Commission File No. 1-15891) Safe Harbor Statement This filing does not constitute an offer to sell or the solicitation of an offer to buy any securities
Slide 2: Forward-looking statements and presentation note
transaction and obtain required regulatory approvals as well as those discussed in (1) Exelon’s 2007 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Sup
Slide 3: Exelon + NRG: A Compelling Opportunity for Value Creation
Sustainable Value Exelon + NRG: A Compelling Opportunity for Value Creation Fixed Income Meetings October 30, 2008
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, for example, statements regarding benefits of the proposed merger, integration plans expected and syn
Slide 5: Exelon's Strategic Direction: Protect Today's Value + Grow Long-Term Value
Exelon’s Strategic Direction Protect Today’s Value + Grow Long-Term Value • Deliver superior operating • Drive the organization to the performance next level of performance • Advance competitive • Set the industry standard for markets low carbon energy generation • Protect the value of our and deliv
Slide 6: The Offer For NRG
The Offer For NRG th • On October 19, Exelon offered to acquire all outstanding common shares of NRG in an all stock transaction; no incremental debt • Fixed exchange ratio of 0.485 Exelon share for each NRG common share • The offer represents: • 9% premium to the 90-day average NRG/EXC exchange rat
Slide 7: Combination Will Result in Key Positives from a Credit Perspective
Combination Will Result in Key Positives from a Credit Perspective • Strong balance sheet and credit metrics • Increased scope, scale, and financial strength • Operational excellence • Geographic diversification • Fuel diversification • Improved dispatch profile • Comparable best practices in hedgin
Slide 8: Premier Balance Sheet and Credit Metrics
Premier Balance Sheet and Credit Metrics • Committed to returning Exelon Generation’s senior unsecured debt to strong investment grade within the next 3 years • Targeting stronger credit metrics for the combined entity— 25 -30%FFO/debt1 • Pay down debt plan will include: NRG balance sheet cash, asse
Slide 9: World Class Nuclear & Fossil Operations
World Class Nuclear & Fossil Operations NRG High performing nuclear plant • Top quartilecapacityfactor – 94.9% • Large, well-maintained, relatively young units Fossil fleet: • Half of >500 MW coal units are top quartile capacity factor • 90% of coal fleet lower-cost PRB coal Exelon Premier U.S. nucl
Slide 10: Combination Enables Access to Attractive New Markets
Combination Enables Access to Attractive New Markets • Geographically complementary asset base • Predominantly located in competitive markets • Attractive new markets for Exelon (NY, NE, CA): declining reserve margins, supportive regulatory structures • ERCOT portfolio will position Exelon to offer
Slide 11: Combined Entity Will Continue to Benefit from Low Cost, Low Volatility Fuel Sources
Combined Entity Will Continue to Benefit from Low Cost, Low Volatility Fuel Sources 2009 Historical Forward Coal Prices <1% <1% Exelon 6.00 1 Powder River Basin ~150,000 GWh 5.00 Northern Appalachian 6% 4.00 Central Appalachian Coal $/mmbtu 3.00 2.00 93% 1.00 0.00 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1
Slide 12: EXC & NRG: Comparable Hedging Strategies
EXC & NRG: Comparable Hedging Strategies Best practices in commodity hedging strategy and risk management will be applied to the combined company Prompt Year Second Year Third Year (2008) (2009) (2010) Target Ranges 90% -98% 70% -90% 50% -70% Exelon 1 3 Financial Hedging Range Current Position >95%
Slide 13: Combination Creates Substantial Synergies
Combination Creates Substantial Synergies ($ in Millions) 1 Exelon Operations & Maintenance: $4,289 1 NRG Maintenance & Other Opex: $950 General & Admin Expenses: $309 Other COGS: $454 Pro Forma Combined Non-fuel Expenses: $6,002 2 Estimated Annual Cost Savings:$180 -$300 % of Combined Expenses: 3%-
Slide 14: Modest Divestitures Expected
Modest Divestitures Expected • Limited market power issuesnot– expected to challenge transaction closing • Divestitures anticipated only in PJM and ERCOT • ~3,000 MWs of high heat rate gas and baseload 1 coal plants in liquid markets 1. Plants subject to divestiture are de minimus contributors to re
Slide 15: Principal Regulatory Approvals
Principal Regulatory Approvals • Texas, New York, Pennsylvania, California state regulatory commissions • Hart-Scott-Rodino (DOJ/FTC) • FERC • NRC • Notice filing in Illinois 13
Slide 16: Financing Plan Considerations
Financing Plan Considerations • Contemplating structure such that the required refinancing is only ~$4B • A negotiated deal with NRG can be structured such that $4.7B of NRG bonds remain in place with no change in terms, but with substantially improved credit metrics for those bondholders • Exelon h
Slide 17: Conclusion
Conclusion • Consistent with what has made Exelon successful – a disciplined approach to managing risk and building future growth • Combined company will have many key credit positives that will enhance Exelon’s ability to succeed in an increasingly volatile energy market • Committed to strong inves